Dear Managers and Directors,
Yesterday, Dec. 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction blocking the U.S. Department of Treasury’s enforcement of the Corporate Transparency Act. See Texas Top Cop Shop, Inc., et al. v. Garland, et al. (“Texas”). In his opinion, Judge Amos L. Mazzant III ruled that “…reporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline pending further order of the Court.”
Plaintiffs in the Texas case made similar arguments to those made in Community Association Institutes’ failed restraining order against the U.S. Department of Treasury and the Financial Crimes Enforcement Network. There, CAI argued the CTA was an overreach of Congress’s authority over the states, improperly compelling speech and contradicting the right of association guaranteed by the First Amendment and violating the Fourth Amendment by forcing the disclosure of private information. In fact, Judge Mazzant’s opinion cites arguments and rulings from CAI’s lawsuit to substantiate his ruling.
Directors who have taken advice from our office and other industry professionals and already complied with the act’s reporting requirements, you have taken the responsible route. The federal government has 30 days to appeal this Texas decision, and we expect that they will. But, based on the new US President, its going to be interesting to see whether the appeal will be pursued or dismissed.
We recognize the situation is complex especially because we are so close to the reporting deadline. We will continue to report as more facts are disclosed.
Sincerely, Community Legal Advisors Inc. Mark T. Guithues |